Permanent salary growth in the UK dropped significantly last month, falling to February 2021 levels. Growth eased for the third month in a row, according to the monthly UK Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC).
Temporary wage rates were also lower in September, but only fractionally so, ending a 3.5-year period of increases. The decrease came as staff availability for temporary positions in the region surpassed the number of roles available, according to the latest data.
The seasonally adjusted data in the Permanent Salaries Index fell to 52.8 in September from 54.4 in August, while the Temporary Wages Index fell to 49.9 from 50.7. Indices with a reading above 50 indicate an overall increase and below 50 an overall decrease compared with the previous month, according to a news release from the REC.
Starting salaries continued on an upward trend, increasing for a 43rd successive month in September, the report said. But ongoing economic uncertainty among employers means the rate of increase was relatively modest.
This trend reflects that some employers are still increasing pay rates to attract talent as shortages of suitable candidates persist, the report said, but salary increases were weakened by an increase in job seekers amidst low demand.
While the rate of contraction for permanent appointments eased slightly, temporary billings fell sharply from 49.5 in August to 46.9 in September, the steepest decline since April, according to the Temporary Billings Index. The report noted that budget constraints and an uncertain business environment may have contributed to recruitment restrictions.
Uncertainty ahead of the government’s late October budget means companies continue to recruit cautiously as they await clarification on future taxation, business, and economic policy, said Jon Holt, chief executive and senior partner at KPMG in the UK.
Consequently, hiring uncertainty across sectors has elevated staff availability for 19 successive months, the report said, as September became the 11th successive month in which vacancies declined.
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